South Korea to use technology to achieve Netzero goals

South Korea has outlined its strategy to achieve carbon neutrality in the industrial sector by focusing on technology solutions, with an aim to cut 120mn tonnes of greenhouse gas (GHG) emissions by 2050.

Representative firms from the four major carbon-emitting industries — chemicals, steel, cement , and semiconductor/displays — formed a consortium as part of the country’s strategy to promote technology development and signed a business agreement to share development results, the country’s trade and industry ministry (Motie) said.

These four sectors emit 190mn tonnes, accounting for 72% of 260mn tonnes of total industrial emissions in 2018. Technology innovation is the only way to cut carbon emissions in these sectors’ production processes because of the nature of these industries, Motie said.

Motie expects carbon-neutral technology development projects in the four major industries to cut GHG emissions by about 120mn t by 2050, which is over 50pc of the industrial sectors’ GHG reduction target of about 210mn t compared with 2018 levels. Motie has also released a steel industry development strategy, with plans to create a fund to boost low-carbon steel production.

The government and industry plan to spend 80pc of their total budget on demonstration projects so that developed technologies can be immediately commercialised. Tax, financial support and regulatory revisions needed for commercialisation will be provided to maximise technological development.

South Korea will secure core technologies needed to achieve its goal of carbon neutrality by 2050.

The country will invest 935.2bn won ($706mn) over 2023-30 to develop carbon reduction technology in the industrial sector, which is a project that had been planned since last year and passed a preliminary feasibility study in October 2022. The project aims to secure core technologies such as naphtha electrolysis furnaces, hydrogen-reduced steel, the substitution of bituminous coal and limestone as raw material in cement manufacturing, as well as low-warming process gas for semiconductors/displays.

A 1mn t/yr demonstration project will be done for hydrogen reduced steel before the commercialisation of 3mn t/yr reactors. There will be a 10 kg/h demonstration reactor for naphtha electrolysis before the commercialisation of a 240 kg/h reactor. For cement mixture there will be a 1mn/yr demonstration firing furnace.

The ministry is also lowering the cash matching ratio for private-sector firm investment to 25pc of the previous ratios of 40-60pc to ease the burden on firms.

South Korea will continue to expand investment tax credits for carbon-neutral technology in the industrial sector. There are 48 technologies, including those for hydrogen-reduced steel, included in the list for investment tax reduction and exemption from last year, with 13 more technologies, including those for steel forging and rolling, to be included from February.

The country is also offering special loans, with W147bn from Motie for carbon-neutral projects, W3.5 trillion from the Export-Import Bank of Korea for low-carbon industrial structure promotion programmes and W100bn from Motie for carbon-neutral technology funds.

South Korea plans to streamline regulations and enhance institutional support. The country is looking to develop 100 national standards for carbon-neutral technologies.

Participants have pointed out that regulatory-oriented carbon reductions may involve side effects such as “reverse growth” in the manufacturing industry, emphasising that it is a “top priority” for companies to be able to cut carbon emissions through developing technology, according to Motie. Motie minister Lee Chang-yang said “co-operative and fair labour-management relations” are also key to corporate competitiveness, emphasising that the amendment to the labour union law passed on 21 February should be carefully considered in following parliamentary discussions as it may curb corporate management activity.